9 types of insurance every restaurant needs

9 types of insurance every restaurant needs

insurance for restaurants

The prospect of beginning a new business is thrilling, but it’s also important to recognize the risks involved. Restaurant operators, whether small or large, bear the danger of injuring customers, staff, and others, as well as inflicting property damage to customers and others, which could lead to a lawsuit.


If you are a hopeful restaurant business owner, purchasing restaurant insurance should be one of your top priorities. As someone who is just getting started in the field and has limited cash, you may believe that insurance is just another item to add to your list. While the premiums may seem like an additional expense, having restaurant insurance has several advantages.


For starters, it will safeguard the company from financial damages resulting from claims for property damage or bodily harm. Having the correct insurance coverage gives restaurant owners and operators peace of mind when it comes to defending claims and paying settlement expenses.

How to choose the right insurance for restaurants?

For choosing the right insurance for restaurants, it is best to compare the offerings of different insurance providers to assist you to make an accurate decision about which coverage is best for your company. Consider the benefits and drawbacks of each product. Other considerations while selecting restaurant insurance include:

  • Determine probable dangers: Different elements that can affect day-to-day operations are addressed by businesses. Examine the various parts of your restaurant and determine which are vulnerable to specific threats. Knowing the hazards involved will aid in selecting the appropriate insurance.

  • Choose by coverage, not price: As with any purchase, the cheapest choice may not be capable of meeting your needs. However, the most expensive insurance does not always imply that it is the best option.

  • Go through the terms and conditions: We may all be guilty of bypassing the terms and conditions from time to time. This is a no-no in the insurance sector. The hard copy of the insurance policy bond reveals important details such as the policy’s inclusions and exclusions. Make sure you read and understand everything.

What kinds of insurance do restaurants need

  1. Commercial General Liability

  2. Commercial Property

  3. Workers Compensation

  4. Commercial Auto Insurance

  5. Liquor Liability Insurance

  6. Garagekeepers Liability

  7. In-House Food Delivery Increases Insurance Costs

  8. Business Owners Policy (or BOP)

  9. Employment Practices Liability Insurance

1. Commercial General Liability

One of the most crucial types of insurance that any restaurant should have is general liability insurance, also called restaurant liability insurance. It protects the restaurant from a diverse variety of lawsuits stemming from injuries or losses suffered by customers, workers, or third parties. Typically, the policy covers cases involving premises liability, product liability, and advertising harm.

The cost of general liability insurance for restaurants is affected by:

  • Business’s location and industry

  • The size of the business

  • Claims history

  • Desired coverage

  • Payroll costs

2. Commercial Property

What if the restaurant’s tangible business assets are harmed by an event, like fire, and require repair or replacement? It could cost a substantial sum of money. However, with business property insurance, you won’t have to worry about having to spend a ton of money replacing damaged equipment or property because it will cover the costs of property loss or damage.

One of the most crucial policies that any restaurant owner should have is commercial property insurance. Unexpected incidents such as rioting, vandalism, fire, robbery, or harsh weather can create damage or losses to the restaurant’s assets. 

The policy covers not only the cost of maintaining or reconstructing the restaurant structure but also things utilized for restaurant management within the structure, such as electrical equipment, furniture and fixtures, cutlery and tableware, and food and beverage inventory.

Take into account, however, that your commercial property insurance policy does not cover all forms of property loss. The following incidents are not a part of commercial property insurance for restaurants:

  • If a consumer falls over a box at your place of business and drops their laptop, this coverage will not help your business.

  • Your automobile was damaged in an accident while delivering a product to a customer.

  • Your employee puts a hole in the wall.

  • A nearby creek overflows after heavy rains, causing floods near your building and inflicting damage to your items.

  • Other forms of commercial insurance can help cover these types of losses and provide your organization with full coverage.

  • You or your employees purposely destroy property.

3. Workers Compensation

Worker’s compensation insurance is a legal requirement. This sort of policy is created with the employees in mind, as the name implies.

Workers’ compensation insurance, often known as workman’s comp or workers’ comp, provides benefits to your employees if they are hurt or sick on the job. These advantages can help:

  • Pay for their medical care and treatment.

  • If they take time off work to recover, they can replace the majority of their missed pay.

  • Benefits for disabled people.

  • If they die in a work accident or from a job-related disease, provide death benefits, such as assistance with burial costs.

Workers’ compensation also provides advantages for small company owners. It also includes liability insurance. As a result, if your company is sued by injured workers or their families, workers’ compensation might assist cover your legal expenses.

4. Commercial Auto Insurance

If you have a vehicle for the restaurant used for delivering food and getting supplies to your restaurant, it is legally required for you to have commercial auto insurance. Here, your personal auto insurance will not cover you. If an accident happens, your personal auto insurance provider will refuse your claims if you use your personal vehicle for work.  To make matters worse, they might cancel your policy altogether. Commercial auto insurance is a bit expensive, but it may be required.

5. Liquor Liability Insurance

Liquor liability insurance covers a business that supplies, serves, or sells alcoholic beverages. This sort of commercial insurance can assist covering claims for bodily injury or property damage caused by an inebriated individual after they were provided alcohol by a corporation.

Liquor liability insurance helps cover the following expenses if your company is defamed:

  • Assault and battery, such as when a consumer to whom you provided alcohol injures another person.

  • Drunk driving when a drunk individual whose firm provided or sold alcohol causes property damage or an accident that results in the death or injury of another driver.

  • Damage to another person’s property caused by a client under the influence of alcohol.

The cost of liquor liability insurance varies. Coverage might cost your company anything from hundreds to thousands of dollars each year:

  • Industry: Certain sectors are riskier, which can lead to higher insurance prices. Restaurants that offer alcohol, for instance, maybe in greater danger than a liquor shop.

  • Coverage limit: The greater the coverage limit on your policy, the more your insurance premium will be.

  • Location: The state in which your firm is located might affect your insurance premiums.

  • Liquor sales: Your rate is affected by the number of sales you make each year.

6. Garagekeepers Liability

Do you have protection if you provide valet service and a customer’s vehicle is destroyed while in your care? Since general liability insurance doesn’t somehow cover automobile accidents, we must hunt for another coverage to cover this sort of incident. 

Enter the garage keeper's policy.

If your restaurant provides valet parking, you can bet that some of the automobiles parked by your crew are pricey. As a result, restaurants employing valet services require this coverage.

7. Cyber Liability Insurance

When you own a small business, you are exposed to several physical hazards, like property damage and accidents. However, utilizing technology might expose your company to hazards. Data leaks and hacking are only a few examples. Cyber insurance may provide wide protection for companies against a variety of technology-related dangers.

Customers that file data breach lawsuits stating that their personally identifiable information (PII) such as credit card numbers, bank account numbers, and personal identifying details were hacked are covered by cyber liability insurance. The coverage also protects the restaurant from data loss due to hacking, malicious software, or virus assaults, as well as money theft due to illegal internet transactions utilizing bank accounts, debit cards, or credit cards.

The total number of restaurant locations, the kind and quantity of personal information stored by the business, the sector it belongs to, the coverage requested, and the total number of workers are all factors that impact the cost of cyber liability insurance.

Several factors can influence the cost of company insurance. As a result, your cyber insurance rates will most likely differ from those of another company. The cost of a data breach or cyber liability may be determined by:

  • Number of clients, consumers, or patients.

  • What kind of sensitive data and information do you have on hand?

  • History of revenue claims.

8. Business Owners Policy (BOP) 

Some of the policies mentioned in the list can be combined into a business owner's policy (BOP). A BOP usually combines general liability coverage, property, and business interruption insurance. If a restaurant has below $10M in annual revenue and has less than 100 employees, it must have a BOP policy. 

If a restaurant generates more than $10M in annual revenue and has more than 100 employees, they need three different policies. It is an effective and cost-efficient way to protect a restaurant business. 

9. Employment Practices Liability Insurance (EPLI)

The EPLI safeguards the restaurant owner from lawsuits and claims of discrimination, harassment, wage discrimination, and wrongful termination. 

Wage discrimination and harassment lawsuits are the second most popular among restaurants. Thus, it is crucial to saving yourself and the restaurant from such claims by securing EPLI coverage.

Ghost Financial: Your Go-to for Restaurant Insurance 

Ghost Financial provides insurance products designed for your unique needs.  

Alongside insurance, Ghost Financial also offers comprehensive financing and business services such as payroll, credit cards, and expansion loans that support ghost kitchens, restaurants, bars, and catering companies.


While acquiring insurance for your restaurant may appear time-consuming and difficult, it is an important element of ensuring that your business is protected in the case of a disaster.


1. What kind of insurance do restaurants need?

Every restaurant should acquire commercial general liability insurance to protect themselves from typical client complaints such as slip and fall incidents. The policy protects you from claims of physical harm or other losses for which your company may be held accountable.

Additionally, every restaurant must have workers’ compensation as is mandated by law, and all other insurance for restaurant safety, depending on the need.

2. What does the commercial property insurance for restaurants cover?

The commercial property insurance for restaurants covers not only the cost of maintaining or reconstructing the restaurant structure but also things utilized for restaurant management within the structure, such as electrical equipment, furniture and fixtures, cutlery and tableware, and food and beverage inventory.

3. What does the commercial general liability insurance for restaurants cover?

The general liability insurance protects the restaurant from a diverse variety of lawsuits stemming from injuries or losses suffered by customers, workers, or third parties. Typically, the policy covers cases involving premises liability, product liability, and advertising harm.

4.  What is the difference between liability insurance and business insurance?

General liability insurance safeguards you from claims arising from property damage or bodily injury. General liability insurance can also safeguard you against lawsuits from advertising injury. Commercial property insurance, on the other hand, protects you from damage to your equipment and your business’s physical location from vandalism, theft, or fires. 

5. What are the 4 most common types of commercial insurance?

Commercial insurance safeguards a restaurant by covering them against losses from injury to employees, damage to the property, or more. The most common types of commercial insurance are mentioned below: 

  • General liability insurance

  • Property insurance

  • Commercial auto insurance

  • Workers compensation insurance